UK ‘Pays Highest Property Taxes’

This article by This is Guernsey on November 7th, 2013 tells us that in the developed world, British people are the one who pays the highest level of property taxes.

British people pay the highest levels of property taxes in the developed world, a think-tank says.

 

British people pay the highest levels of property taxes in the developed world and more than twice the average for the 34 rich countries in the Organisation of Economic Co-operation and Development, according to a think-tank report.

The right-of-centre Policy Exchange said politicians should reject new levies on property – such as the “mansion tax” on residences worth over £2 million favoured by Liberal Democrats and Labour – and instead pledge to bring down housing costs by building 1.5 million new homes by the end of the decade.

The report called for at least one new “garden city” and changes to planning rules to deliver 300,000 new houses a year.

Councils that fail to hit their own housing targets should be forced to release land to local people who want to design and build their own homes, said the thinktank.
The report calculated that property taxes including council tax, stamp duty, inheritance tax and capital gains tax amount to 4.1% of GDP in the UK – the highest in the OECD and well above the average 1.8%.

By comparison, Canada levies 3.5% of national income in property taxes, the USA 3%, Japan 2.8% and Germany 0.9%.

Alex Morton, head of housing and planning at Policy Exchange, said: “No other developed country taxes property more heavily than the UK. Yet rising house prices and falling levels of home ownership have led to many calling for an increase to land and property taxes.

“But these issues will only be solved by genuine reform of the outdated planning system, not a tax raid on peoples’ homes. Politicians cannot try to do everything at once and must focus on the most crucial issues.

“The evidence shows where excess credit and under-supply exist, taxation or subsidy can only have a limited impact. That is why policymakers should ignore calls for a new round of property taxes and instead commit to spreading the benefits of homeownership and stabilising the UK economy by building at least 1.5 million new homes over the course of the next Parliament.

“This means serious reform of the planning system and creating new ways to deliver housing.”

A Government spokesman said: “The UK has the fourth lowest transaction costs for moving house with property taxation making up the smallest component of overall costs.

“The Chancellor has been clear there are no plans for a new house price tax on family homes. This Government has frozen Council Tax for hard-working people and cut business rates for small firms, despite the need to pay off the deficit left by the last administration.

“We have delivered a series of reforms to speed up and simplify the planning system, including a comprehensive package to support self-builders. House builders credit Government action for getting the housing market moving again, and schemes like Help to Buy are giving hard-working people a helping hand to increase home-ownership”
Dan Wilson Craw, spokesman for the PricedOut campaign for people who would like to buy a home but cannot afford to, said: “Every month, private tenants are seeing their dream of home-ownership slipping further from their grasp – and all the while they’re paying off the mortgage of their landlord who gets rich from rising house prices.

“This is a symptom of a society that treats houses as an asset to speculate on rather than somewhere for people to live. Tinkering with the tax system could help make the system fairer, but under-supply is the real problem. If political leaders were bold and built 1.5 million more homes over the next Parliament, they could make a real difference to the cost of living.”

Article Source: http://www.thisisguernsey.com/news/uk-news/2013/11/07/uk-pays-highest-property-taxes/

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U.K. Outlook Raised by NIESR as Property Boom Feeds Spending

This article by Jennifer Ryan of BloombergBusinessWeek on November 4th, 2013 reveals the fast growth of the UK economy as opposed to what was previously reported according to NIESR.

The U.K. economy will grow faster than previously forecast as a pickup in house prices stokes consumer spending, according to the National Institute of Economic and Social Research. 

Gross domestic product will expand 1.4 percent this year and 2 percent in 2014, a 0.2 percentage-point increase for each year, London-based Niesr said in a report published today. Forecasts for annual house-price growth in 2014 were raised to 5 percent from 0.5 percent, adding about 0.5 percentage point to spending projections.

“The housing market has thawed quite noticeably by almost every measure you want to look at,” Simon Kirby, an economist at Niesr, said at a press conference yesterday. “We’ve got quite a buoyant housing market compared with the previous few years. That feeds through and has a knock-on effect to our consumer-spending growth forecasts.”

k Ltd. said last week prices in England and Wales rose 3.1 percent from a year earlier, the biggest gain since 2007.

Bubble Warnings

Help to Buy allows people to buy homes costing as much as 600,000 pounds ($957,000) with a 5 percent down payment. The program began in April with interest-free loans for buyers of newly built properties and the second phase -- mortgage guarantees covering all homes -- was brought forward to last month from January.

The plan has drawn warnings from the International Monetary Fund, and former Financial Services Authority Chairman Adair Turner said last month that Britain risks a repeat of the debt-fueled binge that led to the credit crisis.

“I don’t think any of us are fans of Help to Buy,” said Jonathan Portes, director at Niesr. Angus Armstrong, an economist at the institute, said “the design of it is so wretched, that’s what’s depressing about it.”

“Banks have an incentive to loosen underwriting requirements for mortgages,” Armstrong said. “If you’re going to intervene in the mortgage market there are a lot better ways to do that,” such as through the mortgage-backed securities market, he said.

‘Unsustainable’ Growth

Growth based on consumer spending is “unsustainable” because it’s based on the housing market rather than increases in real incomes, and it’s coming at the expense of household saving, Kirby said. Significant contributions from business investment and trade won’t start until 2015 and 2016, respectively, he said.

Unemployment, now at 7.7 percent, will fall below 7 percent at the start of 2016, though there’s a one-in-five chance it will reach that level in the first quarter of next year, Kirby said. A 7 percent jobless rate is the threshold at which Bank of England policy makers say they’ll consider raising the benchmark interest rate, provided none of the three “knockouts” in their forward-guidance policy are first triggered.

Kirby said that the knockout related to financial stability risks will probably lead to a rate increase in the second half of 2015. The caveats related to inflation forecasts and inflation expectations won’t be triggered, as inflation will drop to the bank’s 2 percent target in the first quarter of 2015, he said.

Article Source: http://www.businessweek.com/news/2013-11-04/u-dot-k-dot-outlook-raised-by-niesr-as-property-boom-feeds-spending

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Here's Who's Buying Those Insanely Expensive Homes In London

This article by Joe Weisenthal of Business Insider on October 28th, 2013 reveals the interested parties who are buying the insanely  expensive homes in London.

The insanely-hot London housing market has become the subject of global fascination.

But who's buying it all?

Deutsche Bank is out with a new report on the London housing market, and it includes this fascinating chart, which breaks down origin of purchaser by price range.

As you can see, at the low end, the dominant share of buyers is domestic UK buyers.

But at the high end, UK-based purchasers make up a tiny slice of the pie. A massive swath of the buyers is Eastern European or Russian. Chinese and Middle Eastern buyers are also quite significant. Chinese buyers actually make up a bigger purchase of the slightly cheaper ranges.

So basically, tons of Chinese buyers at the expensive levels, and then at the ultra-rich level it's a lot of Russian and Eastern European money.

Deutsche Bank, Knight Frank

And as for why they're buying so much.

Lots for investments, and some are buying for their children.

Deutsche Bank

Article Source: http://www.businessinsider.com/whos-buying-london-property-2013-10

89% 'Expect House Prices to Rise'

This article by the Express on October 15th, 2013 reveals that 9 in 10 homeowners confident that house prices to rise to highest level in four years.

Nine in 10 home owners expect house prices to rise in the coming months as market confidence surges to its highest level in at least four years, research has found.

Confidence in the housing market has surged to its highest level in four years, research suggests [PA]
 

Some 89% of more than 9,000 home owners surveyed by property search website Zoopla predict further house price hikes in the next six months, marking the highest proportion seen since its records began in 2009.

Just 4% of home owners across Britain believe prices will drop, down from 17% this time a year ago. People typically expect prices to rise by 5.7% between now and next spring, with London home owners predicting particularly strong growth at 8.3%.

Some 97% of Londoners surveyed expect to see values increase. Separate research by another website, Rightmove, published earlier this week showed that house sellers' asking prices in London have jumped by 10% in the space of just one month to reach a new high of over £544,000.

Two-thirds (66%) of those across the survey who think property prices are on the up said the level of property sales they have already seen in their local area is their main reason for believing this.

Despite home owner confidence remaining higher in the South than the rest of Britain, every region recorded an increase in the proportion of people who think prices in their area are rising. Even in areas of the North and Wales, where confidence was at its lowest, 84% of home owners believe prices are rising.

The West Midlands and Yorkshire and the Humber recorded the biggest jumps in home owner confidence over the last quarter. The proportion of owners predicting price rises has risen from 78% to 90% in the West Midlands, while Yorkshire and the Humber has seen a jump from 72% to 84%.

The low point for home owner confidence recorded by the study was in winter 2010, when just over half (54%) of home owners were expecting price increases.

The Zoopla research was conducted between the end of September and the start of October - just after Prime Minister David Cameron announced that the launch of new phase of the Government's flagship Help to Buy scheme offering state-backed low-deposit mortgages was being brought forward by three months.

Mr Cameron has rejected fears that the UK is heading for a house price bubble, with borrowers being encouraged to over-stretch themselves in a market where the number of houses for sale is in relatively short supply, which is putting an upward pressure on house prices. He has said the market is generally still recovering from a low base.

State-backed lenders Royal Bank of Scotland (RBS), NatWest, Halifax and Bank of Scotland all started offering loans to first-time buyers and home-movers with 5% deposits under the new phase of the Help to Buy scheme from this month. Other major lenders including Santander, HSBC and Barclays have confirmed plans to join the scheme at a later date.

Lawrence Hall, spokesman for Zoopla, said the new phase of the Help to Buy should boost confidence further "across the country" and not just in London, which has continued to attract wealthy overseas buyers looking for a safe haven to place their cash.

Office for National Statistics recently showed that even before the new phase of Help to Buy was launched, UK house prices reached a record high of £247,000 in August and the British Bankers' Association (BBA) reported this week that mortgage approvals to home buyers are at a four-year high.

The Government's Funding for Lending scheme, which was launched in 2012 and has given lenders access to cheap finance to help borrowers, has already had a major impact on the housing market, with the choice of mortgages rapidly increasing and lenders dropping their rates to ultra-low levels.

Here is the proportion of home owners predicting house prices will rise over the next six months by region, according to Zoopla:

:: Yorkshire and the Humber, 84%

:: West Midlands, 90%

:: Wales, 84%

:: South-west England, 90%

:: South-east England, 95%

:: Scotland, 85%

:: North-west England, 84%

:: North-east England, 84%

:: London, 97%

:: East of England, 92%

:: East Midlands, 88%

Article Source: http://www.express.co.uk/news/uk/439012/89-expect-house-prices-to-rise

Home Owners Across the UK Confident About Property Price Rises

This article by Property Wire on October 22nd, 2013 reveals that UK homeowners are confident that property price rises over the next 12 months.

Households in every region across the UK expect the value of their property to increase over the next 12 months, with those in London the most confident about price growth followed by those in the South East.

The latest House Price Sentiment Index (HPSI) from Knight Frank and Markit, which reflects the opinions of 1,500 households across the country, illustrates the localised nature of the market at present, with households in the North East and Wales expecting more modest rises in values.

October’s survey is the first taken since the government brought forward the second phase of its Help to Buy scheme and, while the jump in price perceptions since September was relatively muted, the overall level of confidence about house price gains remains at unprecedented levels in the survey history.

Only one in 14 households expect the value of their home to decline over next 12 months and mortgage borrowers and those who own their home outright anticipate the largest rise in the value of their home in the next year.

Overall it is the seventh month in a row that the index has increased and more than 23% of the home owners surveyed said that the value of their home had risen over the last month, up from 6.3% in October last year. Only 5% of households said the value of their home had fallen over the last month, giving a HPSI reading of 59.1. Any figure under 50 indicates that prices are falling, and the lower the figure, the steeper the decline. Any figure over 50 indicates that prices are rising.

This is up from last month’s record reading of 57.9 and marks the highest reading since the index began in February 2009. This is the most sustained period of upward price movements in three years.

The future HPSI, which measures what households think will happen to the value of their property over the next year, rose to a new high in October at 71.1, up from 69.6, in September. On a smoother three month average basis, the future HPSI reading was 68.8, up from 68.2 in the previous three month period.

‘The momentum in house price expectations gained over the past few months continued this month, with households across the country expecting the value of their home to rise over the next 12 months,’ said Gráinne Gilmore, head of UK residential research at Knight Frank.
‘This is the latest evidence of increased confidence in the market, which has been boosted by the Government’s Help to Buy mortgage guarantee scheme, introduced at the start of the month,’ she explained.

‘The difference in the rate of growth expected in the regions is quite pronounced however, reflecting the localised nature of the housing market at present. Households in London and the South East expect the largest rise in prices over the next year, an indication of the strength of the housing market in the capital and in surrounding areas within easy commuting distance,’ she added.

Tim Moore, senior economist at Markit, said the outlook is positive. ‘Looking ahead, only one in 14 households forecast a decline in their property value over the next 12 months. In London, the number of respondents expecting a price fall between now and October 2014 stands at around one in 30 households, and across the wider South East this proportion has reached just one in 20,’ he pointed out.

Article Source: http://www.propertywire.com/news/europe/uk-property-price-outlook-201310228373.html

Rents in Private Sector Hit Record High

This article by BBC News Business on October 17th, 2013 is about the average cost of renting a home has now rise according to a survey by LSL Property Services.

 

The rental market has been affected by young adults' ability to buy

The average cost of renting a home privately across England and Wales has reached a record high of £757 a month, according to a survey.

Average rents rose by 2.1% in September compared with the same month a year earlier, LSL Property Services said.

This was a 1.8% increase on August, driven by a 3.3% rise in the south east of England.
The lettings group said that greater demand from tenants was pushing up prices.

"Higher rents in almost every region show that, despite government schemes, buying a first home is still a difficult aspiration," said David Newnes, director of LSL, which owns estate agents Reeds Rains and Your Move.

"This is not only down to low salary growth, but also a general shortage of supply - which is the underlying reason why homes are getting more expensive. The long-term trend to renting therefore looks unlikely to change significantly in the near future."

The government has brought forward its Help to Buy scheme, which aims to assist those who can afford mortgage payments, but struggle to raise the necessary deposit to secure a mortgage and purchase a home.

However, critics have said that the scheme could create a housing market bubble, with official statistics suggesting UK house prices are already at a record high.

The LSL survey suggested that tenants' finances were stretched. Some 8.5% of all rent across England and Wales was late in September, up from 7.8% in August.

Article Source: http://www.bbc.co.uk/news/business-24566849

Opportunities as the UK Property Market Comes Back to Life

This article by Richard Watt of Money Observer on October 16th, 2013 reveals that property market in the UK has now regain its life and eager for further developments.

Housing has a unique place in the UK economy. There is a special sense of fulfilment in home-ownership.

‘First-time’ buyers have a priority on the political agenda, while rising home values translate to near-instant voter gratification. A revival in the housing market is front-page news.

This national attitude to our homes creates a number of anomalies. One is the traditional approach to investing in the housing market through direct purchase, buying or upgrading a home or taking on buy-to-let. Home-ownership can be immensely rewarding, but a house is a particularly illiquid investment, while mortgages create a conduit from Bank of England base rates to disposable income that is short, brutal and sometimes nasty.

The flotation of Foxtons, the London-area estate agent, is a sign that the equity market is increasingly providing an alternative route to participation in the property market. A basket of shares might not keep you warm at night, not in a literal sense, but it is a lot more liquid, shouldn’t require a six-figure mortgage and its sensitivity to interest rates is a little less direct.

The Foxtons IPO was heavily over-subscribed, rising 16 per cent on the first day, valuing the business at more than £650 million. Foxtons has some 40 offices, mainly in central London. It is an exceptionally well-run company, with special strength in marketing. The average price of its house sales is £400,000, which puts it in the sweet spot in terms of transaction growth as the recovery develops. It is the right section of the market for the second phase of Help to Buy, which will provide mortgage indemnity for homes worth up to £600,000. In our view, Foxtons is in a position to increase its footprint potentially to 100 offices and possibly more.

Foxtons is not the first estate agent to come to the market. Countrywide floated in March and has outperformed the FTSE All Share (ex investment trusts) by 40 per cent since then (to 24 September). Savills, since its near-term trough in the midst of the eurozone crisis on 4 October 2011, has outperformed the FTSE All Share by 134 per cent.

Estate agents are an interesting and expanding area of the equity market, but the heart of the sector in equity terms is the housebuilders. The sector has seen tremendous outperformance in recent years, with key companies such as Persimmon and Barratt Developments, which over the past three years have outperformed the FTSE All Share by 126 per cent and 156 per cent respectively. In our view, despite inevitable set-backs, the sector should continue to offer robust, market-leading returns.

Current demographics suggest the demand for new housing in the UK should run at around 260,000 units per year, but the market is only supplying half that, around 130,000. It is highly unlikely that supply will reach, let alone overtake demand, on almost any scenario.

The block has been financing, with capital constrained banks requiring significant cash deposits. The government – and everybody who reads a newspaper or watches television or listens to the radio – is aware of this and given the economic benefits of house-building it has taken some bold measures.

The first phase of Help to Buy, under which the government lends new home-buyers 20 per cent of the price towards a 25 per cent deposit, is already having a significant impact, with 30 per cent of new-built homes being reserved through the scheme.

The second phase starts in 2014, providing mortgage guarantees, and should stimulate the market further. The schemes are intended as temporary kick-starts, but the first phase is proving so popular its £3.5 billion funding is likely to expire at some point in 2015 – a date whose proximity to the next election suggests to us it could be replaced, should need arise, by something either as good or better. In the meantime, the banking sector should by then be further on the road to recovery, opening the possibility that affordable commercial mortgages will increasingly become available.

A less publicised but important change is in planning law. Under the new National Planning Policy local authorities are required to maintain a five year plan. In the absence of such a plan, where any planning application is denied, it will be automatically granted on appeal.

This has unleashed fresh tracts of buildable land, a flow unlikely to be completely staunched as plans come to be adopted more widely. So much for the environment – what about the stock specifics? Housebuilders have done well – is there more to come? In my view there is and the numbers tend to support a positive argument. The key decision is whether the UK property market will continue to recover into the medium to longer term.

Let’s take Barratts as an example. We believe it is capable of achieving a return on equity of around 18 per cent on a two to three year view as it builds out land acquired in recent years at attractive profit margins. We expect the industry to be building around 170,000 units a year by the end of this period, significantly higher than current levels but still well below the demographic requirement. From this level, it fair to assume that Barratts’ unit sales can continue to grow at relatively modest minimum of 4-5 per cent a year – given natural demand, government support and ongoing economic recovery – that would leave Barratts with around 75 per cent of its earnings free to distribute as cash to shareholders, which at current share prices implies a dividend yield at around 10 per cent. That is a high yield for a well-run business in a growing market and we would expect most investors to accept something significantly lower, possibly down to around 5 per cent – and that, in turn, implies a much higher share price.

One of the most satisfying aspects of investing in UK mid-cap equities is the dynamism and variety of the opportunities. As the property market comes back to life, it is likely there will be mid-cap companies there to reap the benefits. And as they say in the property business – we are eager for further developments.

Article Source: http://www.moneyobserver.com/news/13-10-16/opportunities-uk-property-market-comes-back-to-life

Top Forecaster Says Housing Bubble Risk 'extremely slim'

This interesting article by BBC News Business on October 13th, 2013 tells us that there will be a lesser chance of housing bubble in the UK because according to ET Item Club investment in housing is forecast to rise 7.5% next year.

The risk of a housing bubble in the UK is "extremely slim", according to one of the country's leading economic forecasters, the EY Item Club.

In its quarterly report on the economy, the Item Club said government schemes such as Help to Buy will help boost house prices by 3.5% this year.

It also forecast that house prices will rise 6.6% next year.

Business Secretary Vince Cable is one of those concerned about the effects of the Help to Buy scheme.

Last month he said there were already signs of "serious housing inflationary pressures" in parts of the country.

And in an interview with the Financial Times on Monday, the chief executive of Lloyds Banking Group, Antonio Horta-Osorio expressed his concerns.

He said that new home building needed to be encouraged by easing planning restrictions, to avoid a "substantial" increase in house prices.
'Well-timed' But Peter Spencer, the Item Club's chief economic adviser, said government efforts to revive the mortgage market had been "well-timed and targeted".

"Despite the recent criticism of these initiatives, the chances of seeing another housing market bubble are extremely slim," he said.

"House prices and transactions are only just recovering from the credit crunch and will be paltry in comparison to those of a decade ago.

"Household finances are also in much better shape, with debt to income ratios now at sustainable levels."

Under the second phase of the Help to Buy scheme, now in place, borrowers across the UK can put down a deposit of as little as 5% of the property price.

The government provides a seven-year taxpayer guarantee to the lender covering 15% of the loan value. It is available for properties sold for up to £600,000 in the UK.

The Item Club forecasts investment in new housing will rise by 7.5% next year and an additional 10% in 2015.

It has also raised its forecast for economic growth this year to 1.4%, up from 1.1%. And next year it expects growth of 2.4%, up from its previous forecast of 2.2%.

Article Source: http://www.bbc.co.uk/news/business-24515285

Help To Buy Lending Scheme Launch Sparks Homes Frenzy

This article by Sarah O'Grady of the Express on October 9th, 2013 tells us the launching of the 2nd version of the Help to Buy scheme swept up Britain's housing market in frenzy.

Borrowers leapt on the new Government initiative which will allow them to buy homes with 95 per mortgages and slash average deposit amounts.

As details emerged of the deals available from lenders, David Cameron said the project would unlock the housing market and help young people without rich parents get their own home.

HSBC became the first major bank outside state-backed Royal Bank of Scotland and Lloyds to announce it was joining the £12billion scheme.

Britain’s biggest mortgage lender Halifax also ann­ounced details of the home loans it would be offering.

Homes valued at up to £600,000 will be eligible with some estimates suggesting 180,000 loans could be taken out – despite fears that the scheme could spark a housing price bubble.

Taxpayers will guarantee up to 15 per cent of a property’s value, in return for a fee charged to lenders, allowing homebuyers to purchase with deposits as low as five per cent.

As the scheme was laun­ched, Mr Cameron visited a three-bedroom show home in Weston Favell, Northampton and met first-time buyers Kayleigh Groom, 28, and her partner Chris Day, 29, from Kettering.

The couple, who have been renting for five years, told him that Help To Buy would enable them to get on the property ladder.

Mr Cameron said: “What we’re doing is making sure that the typical family can buy the typical home.

“The couple I’ve just been with. They’ve both got good jobs. They’ve both got good prospects. They can afford mortgage payments but because they haven’t got a rich mum and dad they can’t get a mortgage. That isn’t fair. That isn’t right.

“So the Help To Buy scheme will help them to get a mortgage and make them homeowners.”

RBS and its NatWest subsidiary said they expect to sign up 25,500 first and next-time buyers over the three-year scheme. The two lenders are extending opening hours at 740 branches to cope with the demand.

Paul Smith, of haart estate agent, predicted Help To Buy will boost property deals by 10-15 per cent in the next 12 months and cut first-time buyers’ average deposit from £33,948 to £7,218.

He said: “We have seen a frenzy of activity with our branches overwhelmed by enquiries in the wake of the launch of Help To Buy.

“We have had the best first week of October for nine years. Last year we had 3,800 buyers registering in that first week, this year it was 7,281 – that’s a staggering 92 per cent increase.”

Article Source: http://www.express.co.uk/news/property/435438/Help-To-Buy-lending-scheme-launch-sparks-homes-frenzy

 

how to Avoid Property Market Dirty Tricks

This article by The Telegraph on October 3rd, 2013 reveals property expert Sarah Beeny's tips on avoiding being ripped off in a rising market.

The housing market is picking up again, which means the familiar cast of property nasties - greedy vendors, gazumping buyers and the oily agents in between - are rising like ghouls back from the dead. And they are bringing with them the old array of dirty tricks that can turn the homebuying process from being merely difficult into pure hell.

Here, Sarah Beeny gives her top tips for avoiding them.

When a property market is busy, there is a lot of pressure on the buyer to move quickly or commit more money than they initially planned.

In this situation, it is crucial for buyers to do their homework.

“I truly believe that people shouldn’t panic buy. You should buy when the time is right for you, not in reaction to what the market is doing,” said property expert Sarah Beeny. “You are buying for 25 years and in that time the market will go up and down, so don’t rush into it.
“Make a considered decision and don’t stretch beyond your budget.”

Before you start looking for a property, you should have a mortgage agreed in principle, Ms Beeny said. “Find out how much you can borrow based on your income and then look around for the best mortgage available,” she said.

Ms Beeny also recommended lining up a solicitor in advance. “You can establish a good relationship and have everything in place when you want to put in an offer – it means the process is less painful and you lessen the risk of losing the property because of delays.”

When you start looking at properties, the most important thing is to look at prices in the surrounding area. “If a new build flat is being valued at £100,000 more than the surrounding properties, for example, there is something out of place,” said Ms Beeny.

Information on sold prices nearby is available online and you can ask neighbours for further details.

Article Source: http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/10352319/Sarah-Beeny-on-how-to-avoid-property-market-dirty-tricks.html

Ants Spy on Their Neighbours to Climb the Property Ladder

This article by Hayley Dixon of The Telegraph on October 2nd, 2013 reveals the same behavior that humans and ants has when it comes to deciding whether they should upgrade their homes or not.

Ants spy on their neighbours, comparing their homes to those around them and waiting for an opportunity to climb the property ladder, a study has found.

The creatures are “nosy neighbours” and like humans must often decide whether they should upgrade or remain in their current home.

But unlike humans, who are susceptible to housing bubbles, the ants seem to invest in their property market in consistent and rational ways, scientists say.

Research by the University of Bristol found rock ants "continually monitor their neighbouring real estate" to scope out potential future homes.

Their efforts depend on the quality of nest they currently inhabit, with those in poor accommodation searching more than others in better homes.

Carolina Doran, PhD student from the University of Bristol's School of Biological Sciences, who worked on the study, said humans could learn from the ants' behaviour.

"This strategy of adjusting their information gathering according to their actual needs and the real value of higher rungs on the property ladder may help ants to evaluate their housing market in a measured and thorough way that puts many of us to shame," she said.

Ms Doran worked with Professor Nigel Franks on the papers, which is published in the Royal Society journal Biology Letters.

They examined 15 ant colonies from Dorset and found that their priorities were comparable to those of many people, including high ceilings and an open living space.
 

Article Source: http://www.telegraph.co.uk/news/newstopics/howaboutthat/10348820/Ants-spy-on-their-neighbours-to-climb-the-property-ladder.html

Private Residential Rental Prices Up Across the UK

This article by the Property Wire on September 26th, 2013 shows that according to the new index from the Office of National Statistics private residential rental prices paid by tenants in the UK rose by 1.2% in the 12 months to August 2013.


Excluding London, were rents are higher than the rest of the country, rental prices were up by 0.8% during the same period, the data also shows.

There were also regional variations with rental prices up by 1.3% in Scotland and Wales and by 1.1% in England. But within England rental prices were up 1.9% in London and 1.1% in the South East of England.

The Index of Private Housing Rental Prices (IPHRP) is a new experimental index that measures the change in price of renting residential property from private landlords and calculates changes in the prices paid by tenants for renting private housing instead of calculating changes in the latest agreed rental prices.

The index examines how much tenants in privately rented accommodation pay in a month compared to the same month in the previous year. ‘This is a new official statistic undergoing evaluation and therefore it is recommended that caution is exercised when drawing conclusions from the published data as the index is likely to be further developed,’ said an ONS spokesman.

The index report says that the large weight that London has in the overall data reflects its high average rental prices and its large volume of private rented property.

All the regions in the UK have experienced rises in their private rental prices since 2011 and since January 2011 England rental prices have increased more than those of Scotland and Wales.

Until April 2013, the annual rate of change in the IPHRP had been higher in England than in Scotland or Wales. However, the annual rate of change has been increasing in Wales and Scotland since late 2012 and is, in August 2013, higher in these countries than in England.

The IPHRP series for England starts in 2005. Private rental prices in England show three distinct periods: rental price increases from January 2006 until November 2009, rental price decreases from December 2009 to November 2010, and increasing rental prices from December 2010 onwards. Of these three periods, 2008 showed the largest rental price increases.

Excluding London, England showed an increase of 0.7% for the same period. From August 2012 to August 2013 private rental prices increased in the nine English regions.
The data also shows that rental price increases have been stronger in London and the South East than the rest of England since January 2011.

The figures highlight the heat building in the London market, according to Jonathan Hopper, managing director of property finders, Garrington. ‘During the Autumn we are expecting to see increasing pressure from those wanting to rent as supply tightens leading to a further firming of rental prices,’ he said.

Article Source: http://www.propertywire.com/news/europe/uk-residential-private-rents-201309268283.html

Bank of England Watches for Possible Property Bubble

This article by Huw Jones and William Schomberg of Independent.ie on September 26th, 2013 shows how Bank of England will keep a watchful eye for possible dangers of another property bubble.

The Bank of England said on today there was no immediate danger of a property bubble in Britain but that it was keeping a watchful eye out.

It also said it wanted more study on how vulnerable hedge funds that rely on borrowing would be to future interest rate rises.

The central bank's Financial Policy Committee (FPC) said Britain's housing recovery "appeared to have gained momentum and to be broadening" but was under control, based on gauges such as level of activity, debt costs and prices compared with incomes.

"In view of that, the Committee judged that it should closely monitor developments in the housing market and banks' underwriting standards," it said in a statement after its September 18 meeting. "The Committee would be vigilant to potential emerging vulnerabilities."

If any action was needed, it would be "proportionate to the risks and consistent with a graduated response."

House prices in Britain as a whole rose 3.3pc in the 12 months to July but jumped nearly 10pc in London, official data showed last week.

This has triggered some concern that BoE and government lending incentives are creating a housing bubble.

Stephen Lewis, chief economist at Monument Securities said the FPC - which is tasked with spotting risks to the economy from the financial system - was right to hold off for now. "It's probably the right thing at the moment. There is a lot of uncertainty at present about the housing market."

The housing recovery has been helped by government and Bank measures to free up mortgage lending. A new phase of the government's Help to Buy programme is to be launched in January.

Governor Mark Carney and finance minister George Osborne have shown no concern about the prospect of a housing price bubble, pointing to levels of activity in the property market that are below their pre-crisis peak.

But earlier this month, a group representing British property surveyors called on the Bank to take measures to slow mortgage lending if national house price growth exceeds 5pc a year.
Ed Miliband, leader of Britain's Labour opposition party, said this week that if he wins election in 2015 he would more than double the number of new homes built annually to 200,000 by 2020 to ease a shortage that has helped to push up prices.

FOCUS ON HEDGE FUNDS

In June, the BoE ordered an investigation into the vulnerability of Britain's financial institutions and borrowers to higher interest rates when central banks around the world start to wean their economies off massive stimulus.

The FPC said in its statement on Wednesday that a moderate rise in long-term interest rates did not pose an immediate threat to major banks and insurance companies and so far "had not led to dislocations in market functioning or significant impact on financial institutions."

However, levels of leverage within hedge funds, which could make them vulnerable to a sharp rise in borrowing costs, "needed to be looked at more closely," the statement said.

The Financial Conduct Authority, which is represented on FPC, said it asked a number of hedge funds during the summer about their preparedness for changes in interest rates following the June FPC meeting and as part of routine supervisory work.

The FPC's wider review of rate hikes would continue by looking at what impact "more significant stresses" would have and how any impact would ripple through the financial system.

The FPC said it will publish on October 1 a discussion paper on the design of a new framework for stress testing banks.

Article Source: http://www.independent.ie/business/bank-of-england-is-watching-for-signs-of-uk-property-bubble-29609879.html

Housing Market Boosts Confidence

This article of the Express on September 23th, 2013 reveals that the economy is now on its strongest levels because of the rise of market housing and jobs.

Consumer confidence in the economy has improved to its strongest levels in at least two-and-a-half years as optimism about the housing market and jobs rises, a report has found.

Sentiment towards the housing market is at its strongest since Lloyds Bank's Spending Power report began in November 2010, while worries about employment were also found to have eased.

Almost one fifth (18%) of people felt positive about the economy in August, showing a sharp increase from just over one in 10 (11%) in January. The proportion of people feeling negative about the economy fell to 31%, showing the lowest levels since research began.

These findings helped Lloyds' overall consumer sentiment index to rise to an all-time high of 115 points in August, marking a 10 point increase since the start of the year.

Patrick Foley, chief economist at Lloyds Bank, said the findings were "very encouraging". He continued: "Increasing consumer sentiment may in time embolden consumers to spend, so helping to underpin the wider economic recovery. In turn, such spending would further help improve the outlook for growth and jobs."

A new high of 39% of consumers were feeling positive about the housing market, which has recently seen a surge in activity following Government schemes such as Funding for Lending which have improved mortgage availability and led to some lenders offering their lowest ever rates.

House prices have also been back on an upward march in recent months, helping some home owners who have seen falls in the value of their property in recent years and who may have previously been stuck in negative equity.

People living in Northern Ireland, which has seen some particularly sharp drops in house prices before more recent signs that prices are stabilising, were the most likely to be downbeat about the housing market. Nearly three quarters (74%) of those surveyed in Northern Ireland said the housing market is "not good" or "not good at all", as did 72% of those in the North of England.

Meanwhile, negative feelings towards the employment market continued on a downward trend. Some 81% of consumers said the jobs market is "not good" or "not good at all", marking a decrease from 82% in July and 87% in May. Young people were the most likely to be upbeat about the employment market. More than one fifth (22%) described it as "somewhat good", compared with 16% of consumers generally.

People are also feeling less negative about how much money they will have in the coming months. The overall balance between those who feel they will have more money in the future minus those who predict they will have less was minus 3% in August, improving from minus 5% in July.

Article Source: http://www.express.co.uk/news/uk/431441/Housing-market-boosts-confidence

Average Property Price Sits at All-Time High of £257,000

This article by Lauren Everitt of EADT 24 on September 18th, 2013 shows that the property market is on its way to recovery with house prices on rise according to experts.

Property in the East of England now costs an average of £257,000 compared to £210,000 in July 2009 when the region felt the knock-on effects of the economic downturn.

Statistics from the Office for National Statistics (ONS) said a 1.4% rise in property prices from July 2012 to this July have helped increase the value of homes, surpassing the previous peak of £235,000 before the recession.

James Girling, director of Colin Girling & Company Ltd and PR representative for the Suffolk branch of the National Association of Estate Agents, said: “Since May the market has improved although it is still a buyer market.

“The Government talk about this ‘bubble’ but there isn’t one. Here in the east of the region we haven’t noticed this boom or bust scenario coming our way.

“It’s been a gradual increase of business and the first time buyers are coming through.
“The market is improving and we are optimistic but everything is two or three steps down from where it needs to be.

“The volume of activity is not where it was in 2006 and 2007 before it all went wrong.”
Michael Bedford, a partner at Bedfords in Aldeburgh, said the market has seen more activity.

“There has been more constant activity as well whereas there were peaks and troughs during the past few years,” he added.

“To many people’s surprise we had a record year in 2010 and this year has been as good but it’s too early to tell if it’s going to be better.”

However concerns have been raised that Government initiatives to kick-start the housing market such as Funding for Lending and Help to Buy are in danger of creating a property bubble, with borrowers over-stretching themselves as access to low-deposit deals returns.

Richard Sexton, director of e.surv chartered surveyors, warned that rising house prices threaten to price some people trying to get on the property ladder out of the market at a time when households are still under pressure from high inflation and stagnant wages.

He said: “If the Government wants to make housing more affordable - and avoid inflating another property bubble - then it needs to encourage more house building.”

Article Source: http://www.eadt.co.uk/news/east_of_england_average_property_price_sits_at_all_time_high_of_257_000_1_2643933

England Needs More New Homes Than Previously Estimated

According to the new analysis England needs news homes a year are needed because of its increasing demand as shown on this article by the Property Wire on September 11th, 2013.

An analysis of Census information for England shows that over 240,000 new homes a year are needed as demand continues to significantly outstrip supply.
 
The analysis by housing academic Dr Alan Holmans published by housing and planning charity, the Town and Country Planning Association (TCPA), shows that the scale of housing need is greater than currently estimated.

Holmans, from the Cambridge Centre for Housing and Planning Research, says in the report that housing requirements are on average around 240,000 to 245,000 per year, with around 60% of all demand and need in the four southern regions of England.

This is up to 10,000 more homes per year than the generally used 235,000 figure. The report also shows that house building levels are slowing rising from their lowest levels since the 1920s, at around 100,000 per year.

‘This research, the first of its kind to analyse the Census 2011 data, is a crucial reminder of the desperate need for more and better housing in the right places. We have a hopelessly inadequate supply of housing and a serious backlog, as well as chronic affordability problems,’ said Kate Henderson, TCPA chief executive.

‘While house building levels remain at about 100,000 per year, the Census reveals a staggering need for over 240,000 homes per year. The research also shows that nearly one third of newly arising housing need requires some subsidy; without this investment affordability, overcrowding and ultimately homelessness will worsen,’ she added.

‘We urgently need a new vision for housing and the development of new communities. That new vision has to ensure a substantial increase in the supply of new homes and address affordability. At the same time, we must focus on building successful new communities, whether as part of urban regeneration or through new Garden Cities. This is essential not just to our economic future but also the social and environmental wellbeing of our country,’ she added.

The figures make projections for 2021 and extend them to 2031 to enable longer term decisions for land use management, planning and local government. The projections in the report, together with adjustments for gains, losses and vacancies in stock, suggest that over 240,000 additional homes will be required to meet newly arising demand and need.

The report says that even if the economy remains depressed and household formation rates remain low, there will still be almost a 20% increase in the number of households over the 20 year period to 2031. This is mainly because of the expected continued growth in population.

It also shows that there was an abrupt break with longer term trends in household formation in England between 2001 and 2011. To take the most obvious example, the number of one person households in 2011 according to the Census was nearly one million lower than the 2008 based projections published by the Department of Communities and Local Government in 2011.

Other large scale shifts in the mix of household types include far more couple plus other adult households than expected. In part this is about younger people staying at home or sharing accommodation for longer. But that is not the whole story as changes are observed in all age groups.

Applying past trends based mainly on household composition would suggest that some 68% of new households would be in the market sector of owner occupation or private market renting without benefits, but that housing to meet nearly one third of newly arising need would require some subsidy.

At the regional level, not far short of a quarter of all housing demand and need is likely to be concentrated in London, with over 60% in the four southern regions. But all regions require significant additional housing investment.

‘It is enormously important that we plan for recovery and deliver much higher output levels. Otherwise if recovery happens increasing house prices will worsen affordability. Planning based on the past few years of recession will simply build in the next crisis,’ said Professor Christine Whitehead, who was involved in the research that lies behind the report.

Chris Tinker, board director at home builders Crest Nicholson, which supported the research, said that the study re affirms the on going need for over 240,000 new homes per annum, 60% of which is required in London and the four main Southern regions.

‘With developer's consented land banks amounting to less than two year's housing demand there is therefore an urgent need for Local Authorities and developers to work together, especially in key demand areas, to identify and plan for a significant increase in new communities within which well designed homes can be delivered. A failure to meet housing demand will continue to undermine affordability and put the future prosperity and success of our communities at risk,’ he added.

Article Source: http://www.propertywire.com/news/europe/england-house-building-analysis-201309118222.html

House Prices Rising at Their Fastest Rate for 3 Years

According to these data and figures from Halifax the average property shot by 5.4% in the three months to August compared with the same time last year as shown  on this article by Mirror on September 7th, 2013.

House prices are rising at their fastest rate for three years, new figures have revealed.

Data from the Halifax showed the average property shot up by 5.4% in the three months to August, compared with the same time last year.

Prices rose by 0.4% in August alone – the seventh consecutive monthly rise, leaving the average home worth £170,231.

Experts say the pick-up in property prices has been fuelled by a flood of cheap finance, boosted by the Bank of England’s Funding for Lending scheme and the Government’s Help to Buy initiative.

Rock-bottom mortgage rates led to a 45% jump in first-time buyers in July, a report earlier this week found.

But critics warn the latest leap in prices is creating another housing bubble that is excluding many people from the property market and lumbering borrowers with large debts.

Halifax housing economist Martin Ellis said: “Overall, house prices are expected to rise gradually over the remainder of the year.”

Halifax’s report follows similar findings from building society Nationwide last week that the housing market revival is gathering pace.

Bank of England governor Mark Carney recently addressed concerns that Government stimulus ­measures risk stoking another property bubble. He said the Bank is “acutely aware” of the potential threats and said action will be taken to clamp down on mortgage lending if needed.

Matthew Pointon, property expert at Capital Economics, said the imbalance between demand and the supply of homes for sale is likely to subside gradually, which will reduce the upwards pressure on prices.

He added: “The rise in wholesale interest rates seen over the past few weeks may soon start to feed through to mortgage rates, dampening demand.”

Comment by Campbell Robb, Chief Executive, Shelter

Some people might cheer as house prices rise again, but not England’s 1.8 million forgotten families.

That’s the number of working families in this country who are taking home between £20,000 and £40,000 – but are still priced out of a reasonable home of their own.

In the past, they would have been able to put down roots in a home they own or in social housing.

But now, their reality is often expensive private renting, where they can find themselves trapped on a merry-go-round of one six-month tenancy to the next. Shelter’s advisers see families like this every single day.

Many simply won’t be able to afford high monthly mortgage payments, thanks to rising house prices.

And Government mortgage guarantees won’t help – because it means borrowing more, and paying higher costs each month.

The root of the problem is that we need more homes that people can afford.

Until we do, the simple laws of supply and demand will keep pushing prices higher.

If we want to give hope to forgotten families, celebrating high house prices won’t help. We need to build more homes.

Article Source: http://www.mirror.co.uk/money/personal-finance/house-prices-rising-fastest-rate-2257130

Prices on Climb Amid Strongest Market Conditions for Six Years in UK

The market is in its best shape since the financial crisis as demand continues to outpace the number of homes for sale, adding to values, according to this recent article by South China Morning Post on September 4th, 2013.

British house price growth accelerated last month amid the strongest market conditions for six years as demand continued to outpace the number of homes for sale, Hometrack said.

Average values in England and Wales rose 0.4 per cent after a 0.3 per cent gain in July, the London-based property researcher said. Prices were up 1.8 per cent from a year earlier, the most since July 2010.

In a separate report, the Engineering Employers' Federation raised its forecasts for UK economic growth and manufacturing output.

Hometrack's survey adds to evidence of a mini-boom in the housing market, with reports last week showing values rising and mortgage approvals at their highest since 2008.

Bank of England Governor Mark Carney said he was alert to risks from the property market and policymakers would act if signs of a bubble emerged.

Richard Donnell, director of research at Hometrack, said: "A lack of housing for sale is set to remain a feature of the market and this will keep an upward pressure on prices in the near term.

"We expect demand to continue to expand over the remainder of the year so long as the outlook for the economy and mortgage rates remains unchanged."

Underlying market conditions are at levels not seen since the financial crisis, with the average time taken to sell a property falling to 8.1 weeks and sellers achieving 94.6 per cent of the price sought last month, Hometrack reported.

New buyers registering with real estate agents to browse property rose 1.1 per cent, the same as in July. Demand fell in August in each of the last three years. Growth in new property listings slowed to 0.8 per cent from 2.4 per cent.

Seven of the 10 regions tracked by Hometrack showed price gains, led by a 0.9 per cent increase in London. Two regions showed no change while values dropped 0.1 per cent in the northeast.

Signs of economic growth have lifted consumer confidence. The economy expanded 0.7 per cent in the second quarter, and recent data suggests the recovery is gaining traction.

A survey by the manufacturers' organisation EEF and the accounting firm BDO showed manufacturing output rose to a three-year high in the third quarter, with a gauge of production rising to 32 from 12.

A measure of investment intentions rose to 24, the highest in six years.

The group raised its forecast for manufacturing growth next year to 2.1 per cent from 1.9 per cent, following a 0.5 per cent contraction this year.

It also raised its forecast for UK gross domestic product growth to 1.2 per cent this year and 2 per cent next year, versus earlier projections of 1.1 per cent and 1.8 per cent.

"Industry's prospects have brightened considerably," said Lee Hopley, chief economist at the EEF. "There is growing confidence that improving trading conditions will continue into the final months of this year and then accelerate through the gears in 2014."

Nationwide Building Society said last week that home prices rose 0.6 per cent last month and the Bank of England's commitment to maintain record-low interest rates until at least the end of 2016 may be helping to support demand.

Article Source: http://www.scmp.com/property/international/article/1302634/prices-climb-amid-strongest-market-conditions-six-years-uk

Deposits Fall and Home Affordability in the UK Improves

According to the new research from Lloyds TBS, the average deposit put down by home owners in the UK in 2013 was £70,540, just 6% higher than a decade ago as as shown on this September 2nd, 2013 article by the Property Wire.
 
The research report says that the average age of a home mover is 40 and affordability for second steppers, that is those moving to their second home, has improved over the last year but fallen over the last decade.

The research also shows that since 2008, the average price paid by a home mover has fallen by 10% from £235,078 to £212,586 in 2013. Nationally, home mover property prices grew by 3% in the past year.

Not surprisingly home movers in London, where prices have been rising faster than in the rest of the country, put down the largest average deposit at £126,528 or 34% of the average property value. This is close to three and half times the average deposit put down by home movers in Northern Ireland at £36,912 and the lowest in the country.

The average mortgage advance for a new home mover is £142,046, a quarter higher than a decade ago when it was £101,472.

With the average age of a home mover now at 40 years old, this has increased three years since 2002 when it was 37 in 2002. Most of the increase in buyer age has occurred since 2007.

Typical mortgage payments for a home mover, that is those already in the housing market, stood at 31% average gross disposable earnings in the second quarter of 2013. This has come down sharply from an all time peak of 52% in 2007. This improvement has been due to a reduction in both mortgage rates and house prices.

Housing affordability for second steppers, calculated as the average price of a typical second stepper home less their current equity position, stood at 4.4 times gross annual average earnings in June 2013 compared with a ratio of 4.9 in June 2012.

A typical second stepper's current equity position accounts for 13% or £21,200 of the price of an average second stepper home, a rise from 1% in 2012.

Although the position has improved for those looking to put down a deposit on a new home, for some potential second home movers this may still not be sufficient to put towards a deposit when also taking the cost of moving into account.

‘Housing affordability for the typical second stepper has improved in the past year.

Nonetheless, there are many potential second steppers who are still in their first home which they bought in the run up to and at the peak in house prices in 2007. Many of these home owners may still be unable to move due to having either very low, or negative, equity in their homes,’ explained Nitesh Patel, housing economist at Lloyds TSB.

‘The lack of equity for many home owners in their existing home largely explains why the number of home movers in the first six months of 2013 was broadly unchanged compared with a year earlier in sharp contrast to the number of first time buyers growing by close to 20% over the period,’ Patel added.

The report also reveals a considerable variation in housing affordability between regions, with northern regions more affordable than southern regions for second steppers. This is largely a reflection of the lower prices for second stepper properties in the north. The West Midlands and East Midlands both at 3.1, are the most affordable regions for those in their first home looking to take their next step on the property ladder. While London at 5.7, the South West at 4.6 and the  East at 4.5 are the least affordable.

Article Source: http://www.propertywire.com/news/europe/uk-property-deposits-afford-201309028183.html

George Osborne's Homes Scheme Could Sideline First-Time Buyers

Help to buy homes scheme could cause property prices to new highs says lenders as shown on this article by Hilary Osborne and Phillip Inman of TheGuardian on August 28, 2013.

Help to Buy scheme may 'give with one hand and take with the other' by pushing costs up by 11% by the end of 2016.

George Osborne's policy of kickstarting the housing market with subsidised mortgages could inflate prices to pre-crash peaks and sideline the first-time buyers it is designed to help, according to a group representing some of the UK's biggest banks and building societies

In the latest warning about the impact of the Help to Buy programme, lenders said property prices could rise by 11% by the end of 2016, with artificially inflated valuations the biggest threat to its success. Without a housebuilding programme to address the extra demand, property prices could spiral to new highs, said the Intermediary Mortgage Lenders Association.

"If house prices continue to rise for the duration of the scheme, then in essence we will be giving with one hand and taking away with the other," said Peter Williams, executive director of the IMLA and director of the University of Cambridge Centre for Housing and Planning Research.

House prices in London are above their 2007 peak, according to the Nationwide building society, but taken across the entire country they remain 9% lower, as IMLA warned that under the scheme the average UK home would cost £180,256 by the end of 2016. That would take average prices close to 2007 peak of £181,975.

The Help to Buy scheme, announced by the chancellor in March, aims to grant mortgages to homebuyers with a deposit of as little of 5% of a property's price.

The first part of the programme, which allows buyers to subsidise purchases of newbuild homes with an interest-free loan from the government, launched in April. It has been credited with reversing a fall in housebuilding and boosting consumer confidence. However, the second part, which will be introduced at the start of 2014 and will offer a taxpayer-backed guarantee to lenders who offer mortgages worth up to 95% of the property's value, has attracted criticism from economists, politicians and other commentators, who have warned it could fuel a house price bubble. Albert Edwards, who heads the global strategy team at Société Générale, described it as a "moronic policy".

IMLA, whose members include subsidiaries of Santander, Barclays and Nationwide that offer mortgages through brokers, said 60% of its members believed the scheme could be undermined by a house price bubble.

While all respondents agreed first-time buyers had the most to gain from the second part of the scheme, they are likely to be the hardest hit by a rise in prices to 2007 levels. This would push the cost of a 5% deposit from £8,321 at the end of this year to £9,013 by the end of 2016.

A recovery in the housing market has accompanied a turnaround in the economy since the beginning of the year. GDP has risen by 1% in the first six months, with most sectors of the economy showing they expanded compared to last year.

However, the TUC is warning that a rise in UK population, by 2.3 million to 63.7 million over the last five years, means the benefits of GDP growth have been spread over a greater number of people. According to a TUC analysis, GDP per head is still 0.7% lower than when the coalition took office and 7.5% lower than the UK's peak level in late 2007.

The TUC's general secretary, Frances O'Grady, warned that the recent burst of borrowing by consumers to fund everything from house purchases to the weekly shop was based on extra debt and not on a rise in incomes.

She said: "Too many people are having to run down their savings or turn to credit cards to spend in the shops, rather than see their incomes grow. And behind improving employment figures are millions of workers whose incomes are falling and who can't get enough hours to make ends meet.

"We all want to see the UK economy back on track but any talk of recovery is meaningless unless we get the right kind of growth."

The current level of GDP per head at £23,728, is mere 0.7% higher than at the lowest point of the recession in September 2009, the TUC said.

Article Source: http://www.theguardian.com/money/2013/aug/28/george-osborne-housing-policies-damage